Blog Tesla to Reduce Production of Model S, Model X

Tesla will reduce production of the Model S and Model X, according to a report from Bloomberg.

“Tesla has set substantially lower daily production targets for the Model S and Model X, according to current and dismissed employees who asked not to be identified discussing plans that aren’t public,” Bloomberg reported.

A Tesla spokeswoman told the outlet that the reduction is related to the removal of entry-level versions of the Model S and Model X starting Jan. 14.

“We recently announced that we are no longer taking orders for the 75 kWh version of Model S and X in order to streamline production and provide even more differentiation with Model 3,” Tesla said in an emailed statement to Bloomberg. “As a result of this change and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly.”

Tesla built 61,394 Model 3 sedans in the fourth quarter, and a total of 25,161 Model S and Model Xs.

The news comes days after Tesla announced layoffs impacting 7 percent of its workforce. Chief Executive Elon Musk said the cuts are needed to bring down costs to make the cars more affordable. The company also feels profitability will be threatened as the lower-priced Model 3 comes to market.

 

[RDoc]

People do realize that the quote: “As a result of this change and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly.” doesn't mean they are reducing Model S and X production quantity right?

It means that they are reducing the number of hours of labor to produce each car.

I've no idea what Tesla is considering for unit production numbers, but that quote doesn't say anything about it.

 

[SSSimon]

Tesla cant just simply replace all production of 75kWh S/X with 100kWh versions. They may do some, but I'd think the production of the majority of 75kWh S/X numbers have simply been cancelled due to the end of the 18650 cell-type 75kWh battery pack.

 

[sandpiper]

People do realize that the quote: “As a result of this change and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly.” doesn't mean they are reducing Model S and X production quantity right?

It means that they are reducing the number of hours of labor to produce each car.

I've no idea what Tesla is considering for unit production numbers, but that quote doesn't say anything about it.

Well... marginally. Cutting out one type of battery module isn't going to save much.

 

[marshallbrown]

And what was the reason behind it?

 

[chadever]

I would take this with large grains of salt. If the interview was with somebody from the line, then they are likely talking about them and their co-workers. And yes, those people will have nothing to do with work being done on a refresh.

If we're assuming a re-tool in early summer, as timing seems to suggest, then it's still all with the manufacturing engineers. Tooling, machinery and automation is on order, dies are being tested. And since we're talking a minor refresh, many aspects of the line will not be changing much if at all. And the manufacturing engineers are undoubtedly have NDAs up the wazoo.

I highly doubt there are more than a handful of people at Tesla that can confidently and accurately tell you what all their departments are working on. The production line at almost any company had no idea what R&D is working on.

The 75 became obsolete once they released the Dual Motor 3. The 75 is their lowest margin S/X and the LR3P is their highest margin 3. Eliminating the self cannibalization helps Tesla produce higher levels of higher margin vehicles.

Tesla also went through rapid growth. They need to have mass layoffs if they want to cut the fat/lower the water. I'm sure this will have positive impact on efficiency and future growth.

 

[Rogstar]

It is interesting because the conventional wisdom was that the layoffs were comprised of Model 3 ramp up people who were no longer needed, and various non production/non service employees.

Turns out the Model 3 is getting a few more people, and the X and S production is getting cut.

The report later this month will be interesting. What comes next for the Model 3? If they can build 10k a month, that is great when you
have a waiting list. What happens when that waiting list dwindles? Will they continue to get 10k orders per week? Is that what is coming
in now?

Don't think in terms of just the US market. Theres plenty of scope for high sales elsewhere.